"Shop compressors with air tools and spray guns hooked to them all have water filters that have a reservoir where gravity is used to keep the water inside the filter."
Seems gravity is the logic behind keeping the filter vertical. I certainly see what you are saying and I'm absolutely not sure which is best. Keeping it vertical makes more sense to me.
If you look at the "vertical" filter in my pic (it's actually horizontal with a vertical reservoir) there is a drain to remove water. In the pic with the Tuxing filter in a vertical position, where does the water "drain"? and where does it go?
Seems to me that it goes back to the compressor, right? To sit in the compressor to be pumped up again? Why you would want to do this makes no sense to me, but to each his own I guess.